Drama Continues for PwC in Russia

Russian authorities raided the offices of PwC's Russian unit, ZAO PricewaterhouseCoopers Audit, last Friday, in search of new criminal evidence to be used against the firm, which the government suspects of tax evasion, and against bankrupted oil giant OAO Yukos, whose senior executives the government suspects of accounting fraud.

According to published reports, PwC said that the raid by about 20 investigators from the Interior Ministry and the General Prosecutor's office lasted all day. Investigators reportedly confiscated company files related to a back-tax claim against the firm, as well as to PwC's work auditing Yukos.

In December, Russian regulators sued to contest some of PwC's Yukos audits, alleging that PwC issued false reports and covered up wrongdoing at the oil company, which went out of business after more than $20 billion in back-tax claims surfaced. PwC has denied all of the charges.

Yukos's founder and former chief executive officer Mikhail Khodorkovsky is serving an eight-year sentence for fraud and tax evasion in a Siberian prison. Last month, prosecutors accused Khodorkovsky of stealing $35 billion, the bulk of the company’s revenues -- which his lawyers have said is absurd and part of the government’s attempts to further decimate the former executive’s political ambitions.

Several other Yukos executives are serving prison terms in Russia, while others have fled the country.

PwC has always denied that it evaded taxes, but after losing two civil court appeals, paid about $14 million to satisfy tax claims and penalties last year.

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